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from Part II - Economic Analysis and Policy Without Preferences
Published online by Cambridge University Press: 02 January 2025
When preferences are incomplete, an agent or policymaker cannot order options from best to worst. Decisions and policymaking are then slanted in favor of the status quo. Individuals and institutions are governed by customary decisions, until a new option appears that allows for an unambiguous improvement. The reshaping of preferences provides a rarely explored escape hatch to this conservatism and is illustrated by how the flexibility of preferences can cure Baumol’s cost disease (low productivity growth in services).
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